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Competition and
Innovation in the Digital
Environment
Smart Cities Conference
Prof. Michal S. Gal
University of Haifa
Motivation
Formative times
Psychological effects
Economic effects
Three trends
Fascinating and challenging issues
Lower Costs of production and supply
• Dream come true
• “Age of Abundance” or “Post-scarcity world”
• How? 3D printing, robotics, internet
– Technologies “destroy existing systems and
replace them with new ones” that will
“increase living standards by lowering costs
and improving quality
Why worry?
• Advancements will not bring what they
can offer, due to strategic behavior
– Unilateral
– Multilateral
• “Artificial scarcity” by those that control
the new technologies
Regulatory Issues
Recognize transition and forces
Rethink legal barriers
Adjust existing tools
Government-supported mavericks?
The Age of big data
• New and significant class of economic asset
• Improved technologies: collection, storage,
mining, synthesizing and analysis
• “Data Religion”
• Big data intermediaries: compete over attention
• Data collection more active
• Internet of things
• psychological-research-based algorithms
Value?
Unstructured data into information
Advanced data science
Important basis for decision-making
Strategic and valuable asset
Entry barriers
Markets not similar
Four categories
Relate to all characteristics
Legal, practical, technological
Determine market boundaries
and competition
Regulatory Issues
How to define dominance?
Balance competing interests
Balance effects on consumer (free)
Do old concepts apply?
Jurisdictional issues?
Example: Access Remedy
Traditionally: FRAND access
But…
What should be shared?
Time and length of access?
Payment?
Essentiality: Diseconomies of scale?
Algorithms and Robo-sellers
• Change the way we interact, communicate and
trade
• Stucke and Ezrachi: “Sophisticated computers are
central to the competitiveness of present and
future markets.”
Potential effects?
Reduced costs
Increased oligopolistic coordination
Stronger cartels
Automated price algorithms
Regulatory Issues
Recognize new forms of cartels
Facilitating practices?
Algorithm police???
Legality of surge prices
Conclusions
Fascinating and important
Past experiences not enough
Need to set clear principles
Otherwise: Collingridge Dilemma
Thank you!
[email protected]
ssrn.com